Best Financials Case Analysis Essay Example

this, Best Financial Inc acknowledges the necessity of revisiting its business plan and assessing opportunities for enhancing daily operations.

In addition to an initiative to hire a new financial advisor, she emphasizes the importance of increasing market share and product diversity for the survival of the company, Best. Integrating the colors blue and white is also crucial for market improvement. The use of a pros and cons format enables the identification of both the advantages and disadvantages of implementing a new strategy. The recruitment of a new advisor could potentially result in increased work output and a reduction in workload. It is preferred to hire a young advisor, as their productivity may be considered higher compared to an older one.

Marketing costs are expected to rise after Young's departure, potentially increasing clients' awareness and attracting new customers. As part of her expansion plans, the company plans to allocate $13,000 for marketing in 2008 after losing its top client. To inform clients about office changes and introduce them to the new advisor, the firm intends to send emails, estimating a cost of $300. Additionally, new office equipment will be purchased for the new advisor, adding to Best Financial Inc.'s expenses.

Assessing the Option of Buying a Block of Accounts
A buying block refers to the strategy of acquiring another financial planner's client list and investments, either fully or partially. The advantages and disadvantages of this strategy are as follows:

Pros:

• The buying block increases revenue, selling more than twice the trailers sales.
• It promotes business continuity for both the purchaser and seller.
• It expands the purchaser's client base, potentially leading to higher revenue.

Cons:

• This strategy carries risk as some clients' accounts may not be profitable,
  

and returns from new clients are uncertain.

Impacts of the Pros and Cons:
The buying block strategy ultimately boosts revenue by increasing the number of client bases. However, there is no guarantee that all acquired clients will contribute 100% revenue. Some may choose alternative business options, resulting in loss of revenues. It becomes crucial to analyze client retention levels to better understand this concept. Total assets amount to $4,022,000.Assuming a prorate of 70%, the total amount would be $2,815,400. The asking price is $49,900. Revenue from trailers totals $33,266.67. The earnings commission is $3,800 with a 70% retention rate and $5,100 with a 90% retention rate.

Employees include Thompson associate with a salary of $35,000 and a receptionist whose payment calculation is $30*14.1*50 = $21,150.

Postage expenses amount to $435. Marketing expenses have increased from $13,000 to $14,100.

If Best can retain only 70% of new clients, additional paper and postage expense will decrease to $350 and additional marketing expenses would be $900.

There is also a one-time legal fee of $5,000.

Revenue from trailers with a 90% retention rate is 90%.

ROI (Return on Investment) for a 70% retention rate equals 638.7/49,900 = 1.3%. Overall Return on Investment is calculated by dividing net profit by total investment amount With a 90% retention rate ROI equals to4 ,715/49 ,900 =9 .5%.

Payback period refers to the time it takes for an investment to recoup its initial investment amount.

If he purchases the project, the time taken will be as follows: assuming a 100% return, the project

retention at 70% is 49990/637.8 = 78.4 years and at 90% is 49990/4715 = 10.6 years.

Recommendation: The best option is to choose the 90% retention level because it provides the highest return on investment and a relatively shorter payback period compared to the 70% retention level.